MidCap SPDRs (MDY) 11/9/09 PriceWatch Alert Up To 23.46% Return

Posted: Monday, November 09, 2009 8:47 AM EDT
By: Market Intelligence Center Staff

MidCap SPDRs (PCX: MDY) ended the last trading session at $123.75. So far MDY has hit a 52-week low of $72.55 and 52-week high of $131.17. MDY has been showing support around 121.24 and resistance in the 126.04 range. Technical indicators are Bearish. MDY appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Jan '10 123 covered call (XTY AS) for a net debit in the $117.85 area. That is also the break even stock price for this trade. This covered call has a 68 day duration, provides 4.77% downside protection and a 4.37% assigned return rate for a 23.46% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the MDY Jan '11 70 Call (OVW AR) and selling the Jan '10 123 call (XTY AS) for a $48.70 debit. The trade has a 68 day life and would provide 4.08% downside protection and an 8.83% assigned return rate for a 47.00% annualized return rate (for comparison purposes only). [ABR-Seven Summits Research]